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Facts
The assessee, a widow retired from MES, filed her return of income. The AO noticed cash deposits totaling Rs. 17,00,000/- during the demonetization period in her bank account. The assessee explained these deposits were from her late husband's funds, her own retirement benefits, and Stree-Dhan.
Held
The Tribunal held that the First Appellate Authority's reasoning for partially sustaining the addition was without sound reasoning. If the assessee's contention was to be believed, it should have been accepted entirely, or rejected entirely. The Tribunal directed the AO to delete the remaining addition.
Key Issues
Whether the partial deletion of cash deposits by the First Appellate Authority was justified without sound reasoning, and whether the remaining addition should be deleted entirely.
Sections Cited
69A, 144, 115BBE, 271AAC
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2017-18 Kamla Verma v. The Income Tax Officer 185/7, Vijay Nagar Ward 1(2)(2) Kanpur Kanpur TAN/PAN:AKCPV2921K (Appellant) (Respondent) Appellant by: Shri Rakesh Garg, Advocate Respondent by: Shri Sunil Kumar Rajwanshi, D.R. O R D E R
This appeal has been preferred by the assessee against order, dated 27.02.2023, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.
2.0 The brief facts of the case are that the assessee is a widow, retired from the Military Engineer Services (MES), Ministry of Defence (Government of India. The assessee filed her return of income for the year under consideration on 31.03.2018, declaring a total income of Rs.2,44,430/-. The case of the assessee was selected for scrutiny under CASS. During the course of e-assessment proceedings, the Assessing Officer (AO) noticed that the assessee had made cash deposits, totaling to Rs.17,00,000/- in her Bank account No.30584698607 maintained with State Bank of India, SME Branch, Fazal Ganj, Kanpur on 11.11.2016 and 19.11.2016, i.e., during the demonetization period. The assessee was required to explain the source of these cash deposits. The submissions of the assessee, vide letter dated 27.08.2019 before the AO were as under:
That the cash deposits made during demonetization period were out of earlier deposits of her late husband Shri Chand Pal Verma who was employee as HC in the MES/CWE, Cantt, Kanpur and had left fund which was deposited in joint bank account maintained in State Bank of India, Hamirpur Road, Naubasta, Kanpur bearing account no.30584698607. That the assessee is maintaining her bank account no. 30584698607 in State bank of India, SME Branch, Kanpur and about Rs.19,00,000/- was deposited in the above bank account from the retirement benefits from the service on 30-09-2015. That the cash was deposited out of husband earlier fund left from her husband and money received from retirement. The cash was held by her due to prolong illness of her husband and herself also who was suffering from anti liver problem. 2.1 Not being satisfied with the explanations furnished by the assessee, the AO treated the entire cash deposits of Rs.17,00,000/- made by the assessee during the demonetization period as undisclosed income of the assessee and added the same to the income of the assessee under section 69A of the Income Tax Act, 1961 (hereinafter called “the Act’). The AO completed the assessment under section 144 of the Act, assessing the total income of the assessee at Rs.19,44,430/- after making an addition of Rs.17,00,000/-.
2.2 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under section 271AAC of the Act.
2.3 Aggrieved, the assessee preferred an appeal before the NFAC, which partly allowed the appeal of the assessee by deleting addition to the tune of Rs.10 lakhs and sustaining the addition to the tune of Rs.7 lakhs.
2.4 Now, the Assessee has approached this Tribunal challenging impugned order of the NFAC by raising the following grounds of appeal:
1. Because CIT(A) has erred on facts and in law in upholding an addition of Rs.7,00,000/- being cash deposited in bank, disbelieving the assessee's explanation which explanation has not been found to be false or untrue, the addition made be deleted.
Because the assessee appellant being a retired person earlier being in service, not keeping well, amounts received by her on retirement and withdrawn from bank and held a cash, cannot be treated as unexplained and be added as income from other sources, the addition made be deleted.
3. Because the CIT(A) has failed to appreciate the facts that the AO has not brought on record any material to disbelieve the claim of the assessee, nor has been able to establish that the assessee has income from any other source, has erred in upholding the addition of Rs.7,00,000/- which addition being contrary to facts bad in law be deleted.
Because the CIT(A) was not justified in disbelieving the submissions in part, thereby upholding the addition of Rs.7,00,000/- which submissions when applicable for the entire addition cannot be said to be unsatisfactory for part addition, the addition upheld by CIT(A) be deleted.
3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 30 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated Nil for condonation of delay, duly supported by an Affidavit of the assessee, Smt. Kamla Verma, stating therein that the assessee being a non-technical person and being ignorant and unaware of the tax laws, came to know about the requirement for filing of the appeal before the Tribunal when the outstanding demand was pressed by the Department and that, thereafter, she contacted the tax advisor through her well-wishers and the appeal was filed before the Tribunal. It was submitted that the delay caused in filing the appeal was not deliberate and that it was beyond the control of the assessee, which may please be condoned and the appeals be heard on merits.
4.0 The Ld. Sr. D.R. had no objection to the delay being condoned.
5.0 In view of the prayer made by the Assessee, duly supported by an Affidavit and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
6.0 The Ld. A.R. submitted that the only dispute before this Tribunal was sustenance of addition of Rs.7 lakhs by the Ld. First Appellate Authority. The Ld. A.R. submitted that the assessee had retired from Defence Services on 30.09.2015 and had received the amount of final settlement from the Department to the tune of Rs.14,55,789/- on 14.10.2015 which was deposited in her Saving Bank accounts. It was further submitted that the assessee had to withdraw cash from her bank accounts to the tune of Rs.8,41,000/- due to prolonged illness of her husband who had subsequently passed away. It was submitted that part of cash deposited was out of funds of the assessee’s late husband, Shri Chand Lal Verma who was a Head Clerk in MES, Kanpur Cantt. It was also submitted that the concept of Stree- Dhan is prevalent in the Indian society and although specific breakup was not available, the assessee also had some Stree- Dhan which would have contributed to cash accumulation which was deposited during the course of demonetization. The Ld. A.R. further submitted that the Ld. First Appellate Authority had accepted various submissions of the assessee but had allowed relief of Rs.10 lakhs only on estimate basis which was legally not the proper course of action inasmuch as there was nothing on record for the Department to prove that the assessee had any other source of income other than as was stated before the AO and also here before the Tribunal. The Ld. A.R. prayed that the assessee’s appeal be allowed.
7.0 Per contra, the Ld. Sr. D.R. submitted that the Ld. First Appellate Authority had already given adequate relief to the assessee by deleting the addition to the tune of Rs.10 lakhs out of total deposit of Rs.17 lakhs. It was further submitted that the assessee had not provided any evidence to prove the source of funds with her and, therefore, the addition had rightly been sustained to the extent of Rs.7 lakhs by the Ld. First Appellate Authority. It was submitted that the assessee’s appeal deserved to be dismissed.
8.0 I have heard the rival submissions and have also perused the material on record. It is seen that the assessee had deposited cash of Rs.17 lakhs during the demonetization period. The AO added Rs.17 lakhs to the income of the assessee being undisclosed income of the assessee on the ground that the assessee could not produce any corroboratory evidence in support of source of cash deposited during the demonetization period. During the course of first appellant proceedings, the Ld. First Appellate Authority observed that it is to be estimated that the assessee had around Rs.10 lakhs in cash with her for deposit during the demonetization period from various sources, like funds received from her late husband, cash withdrawals made on earlier dates, Stree-Dhan and money received by the assessee on her retirement, etc. However, in the impugned order, the Ld. First Appellate Authority did not record a finding as to how he found that the amount of Rs.7 lakhs was not explainable and was liable to be sustained and as to what was the reason for holding that Rs.10 lakhs could be estimated as being available with the assessee for deposit during the demonetization period.
8.1 Looking into the facts and circumstances of the case, I am of the considered view that the finding returned by the Ld. First Appellate Authority is without any sound reasoning. If the contention of the assessee was to be believed, it should have been believed and accepted in its entirety or if it was to be disbelieved, the same had to be rejected in its entirety. I hold that for providing partial relief, there should have been sound reasoning and logic, which in the present case seems to be missing. Therefore, on an overall view of the facts of the case, I am of the considered view that once the Ld. First Appellate Authority given credence to the submissions of the assessee regarding availability of cash with her, the Ld. First Appellate Authority should have deleted the entire amount if there was nothing on record to prove otherwise. Accordingly, I set aside the order of the Ld. First Appellate Authority and direct the AO to delete the remaining addition of Rs.7 lakhs.
9.0 In the final result, the appeal of the assessee stands allowed.
Order pronounced in the open Court on 25/08/2025.